Profits at Starling fell by just over a quarter last year amid a “difficult time” for the bank, which was recently £29m over shortcomings in its anti-money laundering processes.
Founded in 2014 by former banking veteran Anne Boden, Starling banks and lends to both retail customers and small and medium enterprises (SMEs) and is one of the UK’s largest neobanks, with more than 4m customers and £12.1bn in deposits.
Boden resigned as CEO in 2023 and from its board in 2024, before Raman Bhatia, previously head of energy firm OVO, replaced her.
According to financial results released Wednesday, Starling posted an annual pre-tax profit of £223m for the year ending in March 2025 — a 26% slump from the £301m profit the bank reported a year prior.
At the same time, operating costs ramped up to £403m, from £332m as the neobank ramped up its hiring and staff numbers. Revenue at Starling grew in the financial year, rising from £682m to £714m.
Engine, the company’s software-as-a-service side hustle which provides banking software to clients globally, showed some promise and is “outperforming expectations”, says chief financial officer Declan Ferguson in an earnings call today.
Engine’s first Software-as-a-Service clients, Salt Bank in Romania and AMP Bank in Australia, launched their digital banking platforms during the year, contributing £8.7m in fee income compared to £2.3m the year prior.
“Legacy issues”
The neobank attributes the fall in pre-tax profits to two “legacy issues”. First, an anti-money laundering fine of £29m, issued after the FCA found Starling’s financial controls failed to keep pace with the growth of the business between December 2019 and November 2023.
“This was a very difficult time for everyone at Starling, and I apologised to our customers and stakeholders on behalf of the Group,” said Starling’s chair of the board David Sproul in the financial statement. “Today, we have learned important lessons and emerged stronger as a result.”
Second, Starling’s involvement with the Bounce Back Loan Scheme (BBLS). Since the end of the Covid pandemic, Starling has lent to its customers through the scheme to help them manage their repayments, during which it worked with the British Business Bank.
Towards the end of this financial year, however, Starling identified a small group of loans made before April 2021 which potentially did not comply with a guarantee requirement and communicated to the BBB. As a result, Starling volunteered to remove the government guarantee on these loans and, as a result, took a £28.2m provision in this year’s accounts.
Starling isn’t the only fintech to run into compliance costs as of late. In April, UK neobank Revolut was fined €3.5m after failing to tackle money laundering taking place on its app. And at the tail end of last year, Swedish buy now pay later fintech Klarna was fined $46m for breaking anti-money laundering rules.
Read the orginal article: https://sifted.eu/articles/starling-profits-slump/
